Actelion Ltd. (ALIOF) reported fourth quarter 2013 earnings of $1.41 per American Depository Receipt (ADR), soaring 336.4% year over year. Earnings surpassed the Zacks Consensus Estimate of 70 cents.
The company reported net revenues of $511.5 million, up 12.1% from $456.2 million in the fourth quarter of 2012. Revenues were above the Zacks Consensus Estimate of $482 million.
Research & development expenses (R&D) declined 6.6%. R&D expenses fell due to cost-saving initiatives implemented in 2012 and the completion of many large trials. Selling, general and administrative expenses were up by 5.1%.
2013 in Detail
Actelion reported full year 2013 earnings of $4.23 per ADR, up 54.3% from the prior year. Earnings surpassed the Zacks Consensus Estimate of $4.10 per ADR.
Full year revenues were $1.9 billion, in line with the Zacks Consensus Estimate and above year-ago revenues of $1.8 billion.
Product sales were up 6% in 2013 from the prior year. We note that Actelion has four marketed products – Tracleer, Ventavis, Veletri and Zavesca. Tracleer revenues were up 5% in 2013 from the prior year mainly due to solid underlying global unit growth driven by Japan, Germany, PAH emerging markets and the digital ulcer indication in Europe. Ventavis sales were up a nominal 1% from the prior year owing to a competitive market. Veletri, launched in 2010, did very well with sales soaring 60% above the prior year. Zavesca sales were up 14% from the prior year. Strong sales of the drug for the Niemann-Pick type C indication in ex-U.S. markets and increasing prices contributed to its outperformance.
Outlook Upped
For 2014, the company expects core earnings growth in the low single-digit percentage range, above a tough 2013 comparison. Earlier, Actelion expected to maintain the same level of core earnings growth in 2014 as seen in 2013. Actelion maintains its 2015 outlook of single-digit growth over a higher base.
Pipeline Update
Opsumit was approved by the U.S. Food and Drug Administration on Oct 18, 2013. Health Canada, EU and Australia also approved this drug in Nov 2013, Dec 2013 and Feb 2014, respectively.
The final result from a phase III study on another PAH candidate, selexipag, is expected in mid 2014. Actelion’s novel antibiotic, cadazolid, to treat Clostridium difficile associated diarrhea is also in phase III.Results will be out by early 2016.
Ceptaris Acquisition
Actelion has completed the acquisition of privately held Ceptaris Therapeutics. The acquisition closed on the heels of Valchlor, from the erstwhile Ceptaris, gaining FDA approval in mid-Sep 2013. Valchlor is indicated for the treatment of early-stage mycosis fungoides-type cutaneous T-cell lymphoma. Valchlor was launched in Nov 2013 to CTLC Centers of Excellence. By spring 2014, Valchlor will be widely available to U.S. prescribers. By then the build-up of a dedicated commercial unit will be completed.
Share Buyback
Actelion completed a share buyback program worth CHF 800 million in Aug 2013. The program was initiated in Oct 2010. Towards the end of last year, the board announced a new program to buy back up to 8.31% of the outstanding share capital (up to 10 million shares) over the next three years.
Actelion carries a Zacks Rank #1 (Strong Buy). Actelion reported solid earnings mainly due to huge income tax benefit. Revenue growth was backed by products like Veletri and Zavesca. Opsumit approval in many countries including U.S. was encouraging. In the first two months of the launch, the average number of Opsumit weekly prescriptions was more than 200% the average weekly Tracleer prescriptions for new patients before the launch of Opsumit.
Investors may also consider companies like Lannett Company, Inc. (LCI), Endocyte Inc. (ECYT) and Forest Laboratories Inc. (FRX), all of which carry a comparable Zacks Rank #1.
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